A bet is a Valuebet when the odds are higher than the probability of success. Before dealing with this concept more in detail, we want to explain a few notions regarding the calculation of probabilities.
The probability of an event is the ratio between the number of cases that are favourable for that event to occur and the number of all equal possible cases. If you roll a die to get a 5, the chance is 1/6 =16,667%. If a bookmaker offers odds of 6 for a similar event, there will be neither payoff nor loss in the long run since the mathematic expectation of such event (that is, the product of success multiplied by the payoff you receive in case of winning) would be equivalent to 1.
Suppose our bookmaker offers odds of 6.1 for number 5 (instead of 6). In this case, the bet is a valuebet and represents a more positive expectation wager since we would be winners in the long run, as the mathematical expectation would be equivalent to 1/6*6.1= 1.01667% !!
Or suppose we play the lottery and 5 is the first number to be drawn from the lottery wheel. The outcome probability of this event would be 1/90; now suppose a bookmaker offers odds of 92 for this event: this too would represent a valuebet with a mathematical expectation equivalent to 1.0222%. And it would also have a higher value than the previous (1.0222% against 1.01667), but the probability of outcome of the latter would be 1/90. Thus, we are to expect a long series of losses before winning. The latter consideration is fundamental for managing our funds.
Value betting is greatly utilized in sports events, but the difference is that the calculated probability is not objective (as opposed to the rolling of dice), but rather, subjective and only experts are able to elaborate them. Fortunately, there is a wide range of software available today for this purpose.
Valuebets can result from bookmakers’ mistakes or simply from their deliberate decision due to substantial wagers received for other events (coverage)
Once the valuebets have been indentified, they must be divided according to their outcome probability since each one has to be managed differently.
- Valuebets with low outcome probabilities: they have a low outcome probability ranging between 1% and 5% (see the example above regarding number 5 of the lottery.) In this case, one is likely to expect a long series of losses before being able to recover the losses and obtain a return in profit.
- Valuebets with average outcome probabilities, with an outcome probability ranging between 5%. and 15%.
- Valuebets with average/high outcome probabilities with an outcome probability exceeding 15%.
Fund management must be structured in such a way to increase the previous bet each time, to be able to recover all the expenses incurred and gain net profit in case of success. The amount of the initial bet must be as low as the outcome probability. To this end, a calculation sheet may turn out useful, with a dedicated column for the calculation of the wagers that are still to be made, so that you may obtain a return on profit.
Where to find valuebets
Besides our ability to identify an over-estimated event by a bookmaker, it may be useful to consult an appropriate valuebet search engine.